Search TradeWinds

LOG IN TO TRADEWINDS

Log in or start a trial to access this article

GasLog loses appeal

A leading European investment bank is no longer encouraging investors to accumulate shares of GasLog.

Pareto Securities on Monday downgraded the LNG-carrier owner’s New York-quoted stock to “hold” from “buy” and cut its price target to $28.00, which represents a reduction of $2.00.

In a client briefing the firm noted shares have risen by approximately 50% since the start of 2014 but was quick to point out that, more recently, the operator has started to underperform its peers and the broader market.

Pareto said the downgrade is based on a belief that GasLog’s current valuation is “too stretched”. It also argued that there are “more attractive” ways to cash in on the LNG universe “at the moment” but noted the strength of the MLP-market should “not be underestimated”.

When the operator reports second-quarter earnings later this week the bank told investors that it isn’t expecting any surprises. The firm forecast earnings before interest, taxes, depreciation and amortization of $43m, which is slightly lower than the current consensus estimate.

Pareto reminded clients that it was an active period for GasLog, which raised roughly $200m by way of new equity and bonds, took delivery of six LNG carriers acquired from an affiliate of BG Group and inked orders for four newbuildings at Samsung Heavy Industries in South Korea.

“With GasLog Partners up and running, management is now focusing on contract opportunities for the pair of uncommitted newbuilds arriving in fourth-quarter 2014 and first-quarter 2015 and we fear utilisation of these could be disappointing,” the investment bank added.

Product packages starting from $94 per month

Get the latest and most important news of the day – sign up for free to the TradeWinds Daily News Update

GasLog loses appeal

A leading European investment bank is no longer encouraging investors to accumulate shares of GasLog.

Pareto Securities on Monday downgraded the LNG-carrier owner’s New York-quoted stock to “hold” from “buy” and cut its price target to $28.00, which represents a reduction of $2.00.

In a client briefing the firm noted shares have risen by approximately 50% since the start of 2014 but was quick to point out that, more recently, the operator has started to underperform its peers and the broader market.

Pareto said the downgrade is based on a belief that GasLog’s current valuation is “too stretched”. It also argued that there are “more attractive” ways to cash in on the LNG universe “at the moment” but noted the strength of the MLP-market should “not be underestimated”.

When the operator reports second-quarter earnings later this week the bank told investors that it isn’t expecting any surprises. The firm forecast earnings before interest, taxes, depreciation and amortization of $43m, which is slightly lower than the current consensus estimate.

Pareto reminded clients that it was an active period for GasLog, which raised roughly $200m by way of new equity and bonds, took delivery of six LNG carriers acquired from an affiliate of BG Group and inked orders for four newbuildings at Samsung Heavy Industries in South Korea.

“With GasLog Partners up and running, management is now focusing on contract opportunities for the pair of uncommitted newbuilds arriving in fourth-quarter 2014 and first-quarter 2015 and we fear utilisation of these could be disappointing,” the investment bank added.